BaFin: Solaris SE Must Improve Controls or Face Financial Penalties

German financial regulator BaFin said Friday (July 12) that Solaris SE faces financial penalties if it doesn’t improve its controls.

Solaris, which has a banking license in Germany but focuses on providing white-label services to other banks, has not fixed issues as ordered by BaFin in 2022, Bloomberg reported Friday (July 12), citing a statement from BaFin.

In addition, new problems at Solaris have arisen since 2022, BaFin said, and the regulator extended the mandate of an independent monitor that was assigned to Solaris earlier, per the report.

A Solaris spokesman told Bloomberg that the extension of that monitoring “is a formality” and won’t affect the company’s daily operations. He added, per the report, that Solaris “continues to make significant progress in collaboration with the regulator to implement additional measures addressing the identified deficiencies.”

BaFin has been clamping down on mostly digital startup banks, focusing on their processes for preventing financial crimes like money laundering, according to the report.

It was reported in February that the financial regulator was set to relax its crackdown on FinTechs after several firms improved their controls.

In recent years, BaFin announced sanctions on about a dozen neobanks and payment firms, imposing measures like caps on customer growth, bans on certain transactions and requirements to get approval for business partnerships.

“We are seeing progress at individual firms, but not all,” BaFin Executive Director Birgit Rodolphe told Bloomberg in February. “There will definitely be cases where we loosen restrictions this year.”

In April, BaFin fined Commerzbank $1.5 million for anti-money laundering violations, saying that the bank failed to update customer data on time and did not provide sufficient security measures.

Commerzbank told Reuters at the time that it has reworked due diligence and updated customer data.

In May, European digital bank N26 said that BaFin lifted its growth restrictions on the company, effective June 1, after the bank invested in teams and infrastructure to combat financial crime and money laundering.

Over the past two years, N26 invested more than 100 million euros (about $109 million) in compliance, infrastructure and teams for that purpose.

Under BaFin’s restrictions, N26 had been limited to adding 60,000 new customers per month.

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